Investor Predictions and Priorities for 2022
2022 is set to be another record-breaking year for sustainable food-tech investment.
Due to a tidal wave of interest that flooded the food-tech industry over the last year, investors are very much poised and willing to commit large swathes of capital to new technologies that show scale-up potential. The question is, what new themes will capture their interest ?
The organizers of Future Food-Tech spoke to 18 investors to hear what they are excited about in 2022. Three over-arching themes emerged: Sustainability, Food as Medicine, and Alternative Proteins.
Increasing Consumer Demand for Sustainable Solutions
Consumers want to see significant sustainability benefits in the food they eat, demanding food that is good for them and for the planet. In 2022 they will expect emerging food-tech products to be sustainable and environmentally friendly, and investors need to be ready to back them.
“In 2022, we foresee an acceleration of capital in sustainability and climate-tech solutions in line with consumers’ growing interest to buy more local, nutritious food to improve their diet and health (sleep, glucose level, microbiome and immunity) while reducing their negative carbon footprint. Hence sustainable solutions will be high on our agenda, from biopesticides, indoor ag, food waste to novel foods and alternative proteins,” shares Severine Ballick, Partner, MIDDLELAND CAPITAL
Beyond the food itself, consumers will expect sustainable packaging and a low, if not zero, carbon footprint. Companies who made an impact in 2021 include Terracycle, turning non-recyclable pre-consumer and post-consumer waste into raw materials and Footprint, manufacturing solutions to eliminate single-use plastics.
“In the upcoming year, investment capital will seek out transformative technologies that lower our carbon footprint, from energy savings to sustainable packaging,” details Rahul Ray, Investment Director, TYSON VENTURES
ESG investing ensures long-term sustainable returns with future-proof companies. Whilst the short-term profits may be lower, green investments will be essential in the coming years enabling investors to play their role in shaping a more sustainable and resilient food system.
“In the coming year, KBW Ventures is looking to continue diversifying its portfolio across many sectors through our partnership with PROOF Fund. Our focus will be on FitTech, AI, and green technologies; we have already invested in AI, carbon capture, electric aviation, and food security, and we’re looking to see what other sustainability solutions are being put forward. In terms of food-tech specifically, supply chain and ingredients are of interest to us, as is our continued backing of businesses working toward cell-based and precision fermentation models,” explains Prince Khaled bin Alwaleed, Founder and CEO, KBW VENTURES
The COP26 summit heightened consumers’ awareness of their own climate impact and their power to make more sustainable choices. In 2022, investment is required to support innovation and accelerate widespread adoption of sustainable technologies around the world.
“Consumers’ awareness regarding sustainability has strongly increased, to the point that the COP26 coined a new word ‘eco-anxiety’ for people suffering from environmental fear. At Five Seasons Ventures, we want to be part of this fight and that’s why we put impact at the center of our investment theses,” details Niccolo Manzoni, Founding Partner, FIVE SEASONS VENTURES. He shares a few latest investments to demonstrate this commitment: Vly (a pea-based dairy-alternative company in Berlin), The Nu Company (a vegan chocolate company using compostable packaging, committed to plant trees for each bar sold) and air up (a company making reusable water bottles powered by scent).
A Landmark Year for Alternative Protein Scale Up
The global shift towards alternative proteins is happening at an unprecedented pace, fuelled by consumers’ growing concerns around climate change, animal welfare and overall sustainability. It will come as no surprise that funding the launch and scale-up of nutritious alternative proteins is high on the agenda for many agri-food investors.
“2022 will be the year of new alternative protein product launches – further driving momentum in the sector. Across the different production platforms – plant based, precision fermentation derived, fungal, and cell culture – we expect to see numerous new products provided to consumers, either at pilot scale (in the case of cultivated meat) or meaningful scale (in plant-based). Notably, we expect that multiple cultivated meat products will receive FDA and USDA approval in 2022,” details Ryan Rakestraw, Director, TEMASEK
Hadar Sutovsky, VP External Innovation & General Manager, ICL PLANET continues:
“With the rising protein demand, environmental and health challenges will increasingly drive the need for technological innovation in protein production to drive sustainability, nutrition and affordability.”
Plant-based products have yet to reach their full potential. As pioneering companies unveil more affordable and nutritious products to rival meat counterparts, we are excited to see a surge in market share.
“Plant-based meat has only gained ~3% market share in the US to date. In 2022, we predict plant-based market share will continue to grow, and are particularly excited by the power of fungi and fermentation to offer very clean, nutritionally dense substitutes to animal protein,” says Julianne Hummelberg, Vice President, POWERPLANT PARTNERS
Alternative protein hotspots are emerging in Singapore, Canada, Israel and USA. Europe is a region that investors are watching closely with great expectation: Singapore-based Sophie’s BioNutrients recently moved production to the Netherlands and Slovenia’s Juicy Marbles raised $4.5M to develop the world’s first plant-based filet mignon.
“US companies have so far led the way in plant-based meat and other protein alternative products. However, we have recently witnessed the emergence of innovative European start-ups with promising technologies and products that will do more than close the gap. Indeed, we believe 2022 will see European protein alternative start-ups gather market momentum due to their positioning on clean label and sustainability, a must for increasing health-conscious consumers,” shares Tom Espiard-Cignaco, President and Managing Director, CAPAGRO
Accelerators and VCs are investing in the potential of alternative proteins, but so too are governments, celebrities and global food brands. Realizing ambitious scale-up plans will be key to unlocking price parity and reaching consumers worldwide.
“We see industrial-scale fermentation expertise as a key value driver for 2022 and beyond. As fermentation start-ups plan, build, and operate bespoke facilities, they outgrow their ‘classical’ academic skillset. For corporates that can run industrial-scale facilities, this skill gap presents a unique growth opportunity. We are excited to see more corporate partnerships developing to bring sustainable novel ingredients to scale,” shares Friederike Grosse-Holz, Scientific Director, BLUE HORIZON
Cell-based meat companies have recently been hitting the headlines with Future Meat Technologies’ record-breaking $347 million Series B funding and Chef José Andrés joining the board at Eat Just. These milestones are laying the foundations for price parity and consumer acceptance in 2022.
“During 2022 we expect a leap forward in cellular agriculture, a space much needed for new processes and technologies to make it more efficient and scalable,” says Jose Luis Cabañero, CEO and Founder, EATABLE ADVENTURES
“I’m excited to see a lot of fundamental infrastructure come online for the cell-based protein industry. The consumer’s increasing awareness of sustainability will help in achieving more momentum. These consumer demands in combination with an advancing regulatory process will help bring these revolutionary products closer to market,” details Dave Taiclet, General Partner and Managing Director, LEWIS & CLARK AGRIFOOD
Bringing the next generation of alternative proteins to consumers will be a target for many innovators and brands in 2022 as they try to stand out from competitors in the growing market whilst delivering on taste and texture, without compromising on flavour and nutrition.
“2021 has been a big year for alternative proteins and food tech, with a noticeable acceleration in investment activity. For us at Synthesis Capital, the most important focus for 2022 is innovation upstream of the end product, especially given the increasingly crowded market where it is becoming difficult for start-ups, particularly plant-based companies, to differentiate themselves. We believe we’re only at the foothills of what is possible with innovations in the supply chain to enable better tasting, nutritious, more scalable and more sustainable products,” says Rosie Wardle, Co-Founder and Partner, SYNTHESIS CAPITAL
Vivek Dogra, Venture Partner, ECBF continues: “The trend towards flexitarian diets is kind of irreversible, and there is a part to play for everyone – corporates, early-stage start-ups, technology and ingredient players, academia and public entities. Beyond the novelty and sustainability factor, consumers will vote based on the taste, price and versatility of the products.”
Food as Medicine at a Turning Point
Diet, nutrition, wellness, fitness and health are increasingly important for consumers, but what does the next generation of nutrition and health look like for investors?
“Food as Medicine has been of increasing interest to early-stage VCs, a category historically stunted by insurance and pricing challenges. However, I believe we’re at a turning point. There have been over 25,000 IP filings focused on medical food and we’re just now starting to see food businesses receiving insurance coverage. With the emergence of better testing and monitoring techniques for medical food, we’re likely to see real growth in this category,” shares Holly Jacobus, Investment Partner, JOYANCE PARTNERS
“As food production and agriculture are taking on environmental impact concerns, we believe Food as Medicine will emerge as the prominent trend taking on Pharma to align with today’s consumer demand for improved health and well-being,” adds Jonathan Smiga, Managing Partner, KEEN GROWTH CAPITAL
Delivering essential nutrients through the food we eat needs to be at the heart of the food system. Investment focused on enabling consumers to make healthy choices will continue to rise in 2022.
“By focusing on innovation through food and nutrition, we are working to address poor metabolic health, which affects nearly 90% of Americans, and make healthy food widely accessible,” explains Pam Shepherd, Managing Director, MANNA TREE
Ela Madej, Founding Partner, FIFTY YEARS continues: “Metabolic optimization platforms will go mainstream as the connection between food, sleep, stress, exercise and their impact on metabolic health and longevity become clearer.”
Sustainability, Food as Medicine and Alternative Proteins are key priorities for investors as we head into 2022 but as John Cheng, Founder and Director, INNOVATE360, Chairman, FEED9 BILLION explains, they are inextricably linked:
“As we get into the new post COVID-19 world, the focus is zeroing on the battle against climate change and health. I am looking forward to see how start-ups, companies and government in partnership do more to drive this wave of sustainability, health and innovation for 2022, in particular, cell-based meat commercialization and better versions of plant-based meats in the world.”
Investors are betting big on sustainable, future-proof technologies that have scale-up potential. Meet hundreds of investors and ground-breaking innovators at Future Food-Tech in San Francisco (and online) on March 24-25. The summit will bring together investors, food brands, retailers, ingredient manufacturers and technology providers for two days of high impact networking and knowledge-exchange to accelerate technologies across the agri-food supply chain.
The early bird rate for the summit ends January 27. The full program, speaking faculty and delegate registration is available now at futurefoodtechsf.com